As the world’s largest humanitarian agency, WFP uses its procurement needs to boost agriculture in developing nations: in 2012, itbought US$1.1 billion worth of food and more than 75 percent of that was in developing countries. Now, through its Purchase forProgress (P4P) programme, WFP is procuring food from smallholder farmers, giving them a greater incentive to invest in theirfarms.

ADDIS ABABA, ETHIOPIA – For the people of Fugnan Birra in Ethiopia’s Oromia region, it made all the difference to know that the grains they received in a recent WFP food distribution were grown in Ethiopian soil.

Around 6,800 people received food assistance from WFP in August in Fugnan Birra, a town in the Gursum district. Keddo Hada-Jundi,50, was one of those who came to the town seeking life-saving supplies to tide her family through the lean season following a poor harvest caused by inadequate rains.

“I have learnt that the maize we received today is locally produced, and I’m really thankful for those who provided assistance to us here in Ethiopia,” said Keddo.

WFP has adopted a range of innovative programmes to deliver food assistance while strengthening communities’ abilities to withstand cyclical shocks such as drought. As well as providing traditional food rations during emergencies, WFP provides cash or vouchers for training, or for work on assets such as roads and dams as part of its drive to eliminate hunger, and the causes of hunger.

The Purchase for Progress (P4P) initiative is a core component of these efforts. In countries like Ethiopia, WFP works with partners and governments to empower smallholder farmers, strengthen local economies and reinforce national self-reliance.

The UN Food and Agriculture Organization (FAO) estimates that around half of the world’s hungry people are from smallholder farming communities, surviving off marginal lands prone to natural disasters like drought or floods. Through the P4P programme, these smallholder farmers also receive training in key techniques such as post-harvest handling, group marketing, agricultural finance and contracting.

Smallholder farmers in Ethiopia, Africa’s second most populous state, typically tend to less than two hectares, and make up 70 per cent of the country’s labour force.

Ambitious Programme

Ethiopia has one of the most ambitious P4P programmes in the world. One of the biggest deliveries -- almost 19,000 metric tons of maize -- was recently completed by P4P-supported smallholder farmers in 16 cooperative unions.

“I have sold 1,000 kg of maize this year and did not need to walk for one and a half hours as before to reach a market,” said Abdallah Dari, who brought his maize on a donkey to the small Medet Boditi Cooperative Union in the Southern Nations, Nationalities and People’s Region (SNNPR).

Abdallah proudly added that he was now self-sufficient thanks to the sale of his maize, and he still had enough left over to feed his family.

“Our food assistance is reaching millions of people in Ethiopia every year, and if we can use our purchasing power to make long-term changes to build resilience in Ethiopia, then we will truly be useful here,” said Abdou Dieng, Country Director for WFP Ethiopia.

Partnerships are key

The success of P4P deliveries in Ethiopia derives largely from the excellent partnership between all those involved in working towards agricultural transformation, including international donors such as Britain’s Department for International Development (DFID), and an Ethiopian bank.

Thanks to a multi-year funding agreement with WFP, DFID is committed to an annual contribution of GBP20 million. This allowed WFP to sign forward delivery contracts with 16 cooperative unions for the 2013 growing season.

“It is quite simple: without the three-year advanced contribution that we got from DFID, we would not have been able to do this,” said Abdou Dieng.

Shaun Hughes, head of livelihoods and humanitarian team at DFID Ethiopia, said this kind of funding was more cost-effective.

“It promotes local production and allows WFP to buy food at a better price than in the middle of a drought when prices are at their highest. It also makes sense environmentally as the food is produced nearby,” Hughes said.

Banks have also played a critical role. The Commercial Bank of Ethiopia (CBE), WFP and cooperative unions signed an agreement allowing the latter to obtain loans to purchase maize directly from the farmers.

“Not only did this loan allow us to buy maize and increase our sales to WFP from 400 metric tons last year to 2,500 metric tons this year, it also helped to create market access for these farmers and train us about quality and storage (of the grains),” said Kalifa Ossero, manager of the Melik Cooperative Union in Warabie town, in the Silti zone of SNNPR.

ACDI/VOCA, a USAID-funded economic development agency, helped negotiate and draft the contract signed with CBE.

“This is extremely innovative in Ethiopia and the negotiation of the contract will really help in the future”, said Alex Pavlovic, a senior public-private partnership specialist for ACDI/VOCA’s Agricultural Growth Program-Agribusiness and Market Development in Ethiopia.

“Cooperative unions learnt how to draft these contracts but also how to borrow money for the first delivery of maize, for example, and use the payment for this delivery to make the second round possible, rather than getting all the money at once. It was also a good experience for the bank in its relationship with small cooperative unions,” he added.

On 27 August 2013, WFP and its Maize Alliance partners in Ethiopia renewed their agreement and launched an ambitious plan to purchase 40,000 metric tons of maize in 2014.

“The success of local food purchases in Ethiopia also comes from a strong drive from the government. Maize has been identified as one of its key cereals to support Ethiopia’s Growth and Transformation Plan, under which productivity of major crops is planned to double. Smallholder farmers are essential to this strategy and the P4P approach fits into this plan for all services including training in post-harvest handling facilities, storage, finance and access to stable markets,” said Mauricio Burtet, P4P country coordinator in Ethiopia.